Earnings season always brings surprises and serves as a catalyst for companies. In light of yesterday’s reports, Oppenheimer analysts remain cautious on Advanced Micro Devices, Inc. (NASDAQ:AMD) and Exelixis, Inc. (NASDAQ:EXEL). Let’s take a closer look.

Advanced Micro Devices, Inc.

AMD’s shareholders are having a rough morning. The chip giant’s stock is down by 12% in pre-market trading Tuesday, after reporting in-line March quarter results consistent with consensus estimates. However, AMD reported lower-than-expected first-quarter revenue in its server chip business ($391 million, missing consensus estimates of $442.1 million), and provided disappointing gross margin guidance (~33%, down -60 bps QOQ, worse than consensus estimates of 33.3%).

In reaction, Oppenheimer’s top analyst Rick Schafer reiterates a Perform rating on AMD shares, without providing a price target.

The analyst commented, “While the initial Ryzen roll-out appears to be progressing as expected, we believe Naples server CPUs remain a 2018 story, and Vega a wild card against incumbent INTC and NVDA respectively, limiting NT upside. With GM progressing slower than expected, we see limited EPS leverage in the model, keeping us on the sidelines.”

“AMD shares are up 20% YTD (SOX up 12%) following a resurgent 2016 that saw shares increase nearly 300%. Given the run-up, shares could react negatively Tuesday to the limited 2Q revenue/GM upside. It remains unclear if AMD will be able to secure large enough share gains vs. INTC/NVDA to allow meaningful and sustainable profitability over the foreseeable,” the analyst added.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Rick Schafer has a yearly average return of 16.4% and a 71% success rate. Schafer is ranked #55 out of 4569 analysts.

Out of the 25 analysts polled by TipRanks in the past 12 months, 11 rate AMD stock a Buy, 11 rate the stock a Hold and 3 recommend to Sell. With a downside potential of 16%, the stock’s consensus target price stands at $11.40.

However, Oppenheimer analyst Leah R. Cann remains sidelined as he continues to find the shares fully valued. As such, the analyst reiterates a Perform rating on EXEL stock.

Cann noted, “Exelixis became profitable for the first time this quarter, due to higher-than-expected revenues. Cabometyx, Exelixis’ small molecule drug for the treatment of renal cell carcinoma, has been adopted more rapidly than we estimated. Due to the combination of meaningfully higher-than-estimated revenue and slightly lower-than-estimated operating expenses, Exelixis earned $0.05 per share compared to our estimated loss per share of $0.03. Our outlook for Exelixis is being modestly adjusted for years 2017– 2021 to account for the more rapid adoption of Cabometyx in 2017, adjustments to operating expenses in 2018 and 2019, and adjustments to expenses and tax rates in 2020 and 2021.”

However, “On the basis of our 2021 estimated revenue of $1.14 billion, Exelixis’ stock currently trades at a 2021 price-to-revenue of 5.9x. According to our proprietary database, the average forward price-to-sales of the biotechnology sector is currently 12.5x. If we discount our estimated revenue for risk of failure, we arrive at a value that is in the range of Exelixis’ current stock price.”

According to TipRanks.com, analyst Leah R. Cann has a yearly average return of 12% and a 68% success rate. Cann is ranked #942 out of 4569 analysts.

Out of eight analysts polled by TipRanks (in the past 12 months), six are bullish on Exelixis stock, while two remain neutral. With a downside potential of 1.5%, the stock’s consensus target price stands at $22.80.